Precision in Procurement

Good View: Every second two people around the world are deciding to buy eyeglasses produced by Carl Zeiss AG. Photo: Carl Zeiss AG

Carl Zeiss
Carl Zeiss AG is a leading optical and opto-electronics company and the market leader in a number of fields. It is wholly owned by the Carl Zeiss Foundation. The company focuses on the growth markets of medical and research solutions, industrial solutions, and lifestyle products. In fiscal year 2006/07, the company posted revenues of €2.604 billion (approximately U.S.$3.712 billion, based on current exchange rate), of which two-thirds was earned in Europe. The company has 12,000 employees.

Despite being a global company, Carl Zeiss AG is headquartered in Oberkochen, a southern German town with just about 8,000 residents. The optical and opto-electronics specialist manufactures a broad range of products, from binoculars and measuring instruments to powerful microscopes and lenses with extraordinary precision used to manufacture semiconductor chips.

This diversity is reflected in the company’s five divisions. The medical systems division is a listed company, Carl Zeiss Meditec. Along with an investor, the company also owns the world’s second largest manufacturer of eyeglass lenses, Carl Zeiss Vision. “This gives us the greatest possible flexibility in our operations,” says Werner Kalbfuss, head of purchasing for the Carl Zeiss Group. The company’ divisions are responsible for purchasing; the group’s central purchasing organization acts on their behalf.

In 2000, Kalbfuss and his colleagues introduced an electronic catalog as an interim solution that they had developed internally. “Unfortunately, nothing is as reliable as a functioning temporary measure,” says Uwe Winkow, who works in the group purchasing organization. The system generated a lot of administrative work and was not really suitable for automating processes. Finally, an increase in value-added tax at the beginning of 2007 threatened to push the system beyond ist limits. It was time for Carl Zeiss to look for new software.

Future shop as service

The company’s divisions were consulted in the decision-making process at an early stage because headquarters intended to make the future shop solution available to them as a service. “Our philosophy was, and is, to integrate the divisions rather than give orders,” says Kalbfuss. Carl Zeiss AG’s bid invitation covered 28 pages of requirements and ended with the sentence: “Questions will not be answered.” This uncompromising approach forced bidders to digest the information in the document very thoroughly.

“We’d had experience with this before,” recalls Kalbfuss. “One bidder even spelled Carl with a ‘K.’ We demanded the best work and the highest quality.” Even the best candidates fulfilled only 70 percent of the criteria. Ease of use had top priority; “Five clicks to place an order” was the expectation. Other criteria included performance, reliability, scalability, and the market position of the vendor.

Carl Zeiss wanted to operate the software in a decentralized manner, implement it quickly, and make it available on demand. “We ran our system ourselves for years – with all the advantages and disadvantages that go with it. Today, we work on the basis that a company whose core business is to operate software can do it better than we can,” states Winkow. Another important factor was compatibility with Carl Zeiss’s SAP-based enterprise resource planning (ERP) system. “We’re a keen SAP customer,” says Kalbfuss. “SAP is and will remain our backbone.”

eProcurement from Hubwoo

In the end, Carl Zeiss opted for the eProcurement solution from international SAP partner Hubwoo. The solution is based on the SAP Supplier Relationship Management application and offers additional functions. “Hubwoo did the best job adapting to our requirements,” says Kalbfuss. As planned, the system went live in January 2007. The company’s divisions have remained flexible, and tight integration with suppliers makes it easier for employees throughout the Group to place orders. The interface to the SAP system ensures that purchasing costs are always transparent.

Winning over employees

Corporate Headquarter Carl Zeiss in Oberkochen (Photo: Carl Zeiss)

Employees were skeptical at first. “However, once we demonstrated the benefits of the solution, everyone wanted to be involved,” reports Kalbfuss. Talking to employees directly, and thus actively marketing the eProcurement solution, proved to be a good tactic. Annemarie Greindl, who is responsible for the process in the group purchasing organization, ensures that everything runs smoothly and that internal customers are satisfied.

A newsletter provides information about new features, and the people responsible for purchasing in the various divisions hold regular workshops to discuss potential improvements. A recently conducted user survey provided positive feedback but also suggested further developments that are currently being implemented successively.

“You can’t just install a system and tell people to start using it,” stresses Winkow. “You have to show that you can do more than make colorful presentations to win over employees. When they see that someone is looking out for them, they cope with changes much better.” In the end, it’s a win-win situation for everyone: for suppliers because they can process order data in an integrated fashion, for the company because it can reduce and monitor costs more easily, and for employees because the processes are easier to understand, more streamlined, and faster. “All we want to do is place an order, receive the goods, and pay,” says Winkow. Procurement can be that easy.